3 Legal Teams Vie To Rep Wells Fargo Investors In PPP Suit
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Law360 (August 4, 2020, 10:24 PM EDT) — A trio of legal teams, including attorneys from Pomerantz LLPand the Rosen Law Firm PA, want to lead a proposed class of Wells Fargoinvestors who allege they were hurt when the company “unfairly allocated” Paycheck Protection Program loans.
Three motions for appointment of lead plaintiff and approval of lead counsel were filed with U.S. District Judge Richard Seeborg on Monday in Northern California federal court.
Investor George Kwinecki allegedly lost $162,896.92 when the price of Wells Fargo stock fell and would be represented by the Rosen Law Firm.
Winston P. Kuo, another individual investor, claimed he lost $27,885.95 in connection with the alleged securities fraud, and requested representation by Levi & Korsinsky LLP.
And a pair of investors represented by Roche Cyrulnik Freedman LLPand Pomerantz said that together, they lost “at least” $212,312.67 as a result of the alleged misdeeds.
“Movants believe they have the largest financial interest in the outcome of this litigation,” the investors, David Coy and Aaron Yortiss, told Judge Seeborg.
The suit, which was filed in June, names Wells Fargo CEO Charles W. Scharf and the company’s outgoing finance chief John Shrewsberry as defendants alongside the financial services company, court records show.
In the action, investor Guofeng Ma alleges that Wells Fargo opened up the bank to litigation and possible regulatory scrutiny and enforcement actions with its administration of PPP loans authorized as part of the Coronavirus Aid, Relief, and Economic Security Act.
Allegations that the bank improperly managed the distribution of $10 billion it was tasked with getting into the hands of small-business customers caused the stock price to drop more than 5% in April and again fall more than 6% in May, Ma claimed.
The shareholder suit alleges the country’s fourth-largest bank misled investors when it said it was focused on lending to businesses with fewer than 50 employees and nonprofits. In fact, the investors claim, the bank selected loans between $2 million and $10 million to earn processing fees of up to $100,000, as opposed to smaller loans under $350,000 where it would make $17,500 or less in processing fees.
Wells Fargo is also facing lawsuits brought by small business owners who claim the company improperly required businesses to bank with the company as a precondition for applying for a PPP loan.
Wells Fargo press releases cited in Ma’s complaint stated that the bank would “focus lending to nonprofits and small businesses with fewer than 50 employees,” and said that the bank would give its processing fees to nonprofits helping small businesses.
The proposed class would include investors who purchased Wells Fargo shares between April 5 and May 5, 2020.
Attorneys for all of the proposed lead plaintiffs and attorneys and representatives for Wells Fargo did not immediately respond to requests for comment Tuesday.
Kwinecki is represented by Laurence M. Rosen of the Rosen Law Firm PA.
Kuo is represented by Adam C. McCall and Adam M. Apton of Levi & Korsinsky LLP.
Coy and Yortiss are represented by Ivy T. Ngo, Velvel (Devin) Freedman, Constantine P. Economides, Kyle Roche and Jason Cyrulnik of Roche Cyrulnik Freedman LLP, Jennifer Pafiti, Jeremy A. Lieberman, J. Alexander Hood II and Patrick V. Dahlstrom of Pomerantz LLP, Brian Schall of the Schall Law Firm and Peretz Bronstein of Bronstein Gewirtz & Grossman LLC.
Wells Fargo, Scharf and Shrewsberry are represented by Brendan P. Cullen and Sverker K. Hogberg of Sullivan & Cromwell LLP.
The case is Ma v. Wells Fargo & Co. et al., case number 3:20-cv-03697, in the U.S. District Court for the Northern District of California.
—Additional reporting by Rachel O’Brien, Grace Dixon and Craig Clough. Editing by Breda Lund.
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